House Panel Rejects Pay Cap, Most TRICARE Hikes

May 24, 2013

(MILITARY.COM 23 MAY 13) … Tom Philpott

Even as defense budgets drop like a rock and the Joint Chiefs urge Congress to spread some of the fiscal pain across personnel accounts, the House armed services subcommittee on military personnel has said “No.”

On Wednesday, the panel unanimously rejected the Obama administration’s call to cap the 2014 military pay raise at one percent versus the 1.8 percent needed to keep pace with recent private sector wage growth.

It also blocked almost all of the administration’s plans to increase TRICARE fees substantially for military retirees and their families over the next five years, including an idea to vary fees based on retired pay levels.

The lone exception is that the House panel will not block a $4 increase in co-payments for retirees under age 65 and their family members for outpatient care under TRICARE Prime. Co-pays for doctor visits would increase to $16 except for mental health care, which would stay at $12.

“We cannot block this $4 increase because it would incur significant mandatory spending that we cannot offset without taking resources from other medical research and health programs our service members depend upon,” explained a press aide to Rep. Joe Wilson (R-S.C.), chairman of the personnel subcommittee.

“The Department of Defense does not have authority to raise any other fees within TRICARE and we are not granting them statutory authority to do so,” she added. “Chairman Wilson is committed to ensuring that our service members and retirees have the highest quality medical care as well as ensuring that DOD honors the commitments that have been made” to current beneficiaries.

The Joint Chiefs of Staff and secretary of defense had argued for the higher TRICARE fees so that readiness accounts – training, maintenance, supplies and weapons procurement – could remain in balance amid the steepest drop in defense spending seen since just after-World War II.

But in a phone interview, Wilson said there is bipartisan resistance inside the House Armed Services Committee to capping pay raises or boosting TRICARE fees. He cited several reasons for this.

First, U.S. troops still are fighting terrorism across the world. Second, over the last several years, Defense officials have overstated health care costs, enough so that they were able to reprogram on average $400 million a year from projected pops in health spending into other defense accounts.

Finally, Wilson said, “there were commitments made to service members and retirees” to sustain the value of their health benefits, even presumably as health costs continue to climb nationally. “And I believe the commitment should be maintained.”

Wilson and staff said President Obama has authority to cap the military pay raise without congressional approval. He only need to claim “serious economic conditions” or national emergency to do so, and then to present Congress with an “alternative pay adjustment” plan by Sept. 1.

Wilson said he hopes the president won’t choose that path given bipartisanship support for a full 1.8 percent military raise next January.

To the argument that pay and allowances need to share in the historic budget slowdown occurring to keep the force “in balance,” Wilson said he doesn’t share that view nor do his colleagues, a sign of “how much we, and the American people, appreciate their service.”

Wilson acknowledged planned defense cuts that would total more than a trillion dollars over the next decade, including almost $600 billion in cuts mandated by the budget sequestration formula Congress and the President Obama devised to try to force a deal on reducing the nation’s debt.

But Wilson said he opposed it all – the sequestration feature of the 2011 Budget Control Act, that law’s initial swipe at the debt with $487 billion in defense cuts over a decade, and $100 billion in “defense efficiencies” directed by then-Defense Secretary Robert Gates in 2011. Why?

“We have a worldwide threat that raises its head everyday. And we need to be ever vigilant. And we are truly, I believe, in a global war on terrorism,” he said. “The American people are being threatened and the way to respond is through strength, not by reducing our capabilities.”

Wilson’s subcommittee approved the military personnel section of the fiscal 2014 defense authorization bill Wednesday and referred it to the full committee for mark up June 5. It featured initiatives to deal with rising incidents of sexual assault within the ranks, through new whistle-blower protections and dedicated legal assistance for victims.

Rep. Susan Davis (Calif.), ranking Democrat on the subcommittee, agreed with Wilson’s comments on bipartisanship. She did not give her own reasons for rejecting the smaller pay raise or Obama’s call for sharply higher co-pays on prescriptions filled off base or raising TRICARE enrollment fees on working-age retirees.

The Senate Armed Services Committee will work its own version of the defense authorization bill next month and is expected to embrace more of the personnel cost controls proposed by the president. Even Sen. Lindsey Graham (S.C.), ranking Republican on the personnel subcommittee, has said he will support higher TRICARE fees if they made the benefit more sustainable, which military leaders argued in defending their 2014 budget.

The staff of the House committee noted that TRICARE cost growth will be slowed this fall by Defense plans to end TRICARE Prime for 177,000 current enrollees living more than 40 miles from military treatment facilities. These Prime provider networks will end, forcing retirees under 65 and their families to use TRICARE Standard, the less generous fee-for-service option.

Also Oct. 1, beneficiaries 65 and older must have their maintenance medications for chronic conditions filled on base or through mail order rather than at local drug stores or supermarkets. This will begin as a pilot program but it could become permanent, saving TRICARE millions of dollars a year on pharmacy costs.

Also, House staff noted, Congress did approve some pharmacy co-pay increases and modest TRICARE Prime enrollment fee hikes last year, and agreed to increase them annually based on the inflation index used to adjust government retired pay.

“That’s the deal we made with the Defense Department, with retirees and service organizations,” said a House staffer. “We don’t particularly see any need to revisit that deal.” He added that retirees and families “deserve some predictability” versus benefits at risk of new hikes year after year.